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Reduction in Raw Milk Supply in the EU Pushes Up Purchase Prices

Ukraine 15.10.2024
Source: DairyNews.today
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The reduction in milk yields is driving up raw milk prices in most EU member states. Meanwhile, a slight slowdown in demand for dairy fats and skimmed milk powder allows dairy processors to allocate existing raw milk volumes toward producing cheese and other more profitable products. The delicate balance of milk supply and demand helps stabilize purchasing prices in Europe, reports Georgiy Kukhaleishvili, an analyst with the Ukraine Milk Producers Association.
Reduction in Raw Milk Supply in the EU Pushes Up Purchase Prices
According to preliminary data from the European Commission, the average raw milk price in the EU reached 47.45 euro cents per kg in September 2024, up 0.1% from August. Compared to September 2023, milk prices in the EU increased by 8.6%. In Ukraine last month, raw milk averaged 46.27 euro cents per kg.

Since August 2024, raw milk prices have risen in 17 EU countries. Among major dairy producers and exporters, prices increased in Denmark to 49.87 euro cents per kg (+2.2%), in France to 47.22 euro cents per kg (+1.8%), in the Netherlands to 51.00 euro cents per kg (+3.4%), and in Poland to 47.93 euro cents per kg (+1.1%). The biggest price increase was seen in Belgium, reaching 51.47 euro cents per kg (+13%).

In September, purchasing prices remained unchanged in Germany, Ireland, Spain, Italy, Portugal, Hungary, Malta, and Cyprus compared to August 2024. Slovakia saw the largest decrease, with raw milk prices falling to 39.45 euro cents per kg (-6.1%).

Traditionally, the highest raw milk prices are found in Cyprus (63.27 euro cents per kg), Malta (62.45 euro cents per kg), and Greece (53.30 euro cents per kg). The lowest prices are received by farmers in Latvia (39.36 euro cents per kg), Slovakia (39.45 euro cents per kg), and Estonia (42.00 euro cents per kg).

Compared to September 2023, raw milk prices increased in 20 European countries and decreased in 6. Year-over-year, the highest price increases were in Belgium (+26.1%), Ireland (+21.5%), Lithuania (+20.8%), and Sweden (+20.2%), while the largest decreases were in Spain (-8.9%), Finland (-8.1%), and Portugal (-7.1%).

Georgiy Kukhaleishvili notes that since the beginning of 2024, purchasing prices in the EU have been gradually rising due to a constrained supply of raw milk in member countries. According to the USDA, milk production is declining in Germany, the southern Baltic countries, parts of Poland, and the Balkans, including Greece. The intense summer heat affected crop yields and pasture availability. Data from the AHDB indicate that poor harvests are likely to increase production costs on farms. In Finland, raw milk production costs have surged in recent years, with moderate retail price increases only partially offsetting this trend. As a result, small farms have halted operations, and the number of dairy companies in Finland has fallen to 4,200 (-8%).

An outbreak of bluetongue in cattle in northern and central Europe, including Austria and Sweden, has further exacerbated challenges for the dairy sector. Cheese stocks in European warehouses are lower than usual due to a lack of raw milk needed by cheesemakers. However, a lack of strong demand for skimmed milk powder and reluctance to buy butter in bulk at current prices have allowed processors to focus on producing cheese and other more profitable products. The market maintains a precarious supply-demand balance, which helps to prevent sharp price fluctuations.

Press Office of the Ukraine Milk Producers Association

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